ISLAMABAD: Canadian mining firm Barrick Gold Corporation expects Pakistani parliament and the Supreme Court to sanctify its $6 billion out-of-court settlement on international arbitration to pave the way for $7bn investment in Reko Diq copper and gold project development in Balochistan.

“For stability of agreement, it is important that the Supreme Court of Pakistan review it [settlement] and parliament endorse it through legislation,” said Mark Bristow, the president and chief executive officer of Barrick Gold Corporation, at a news conference here on Monday after a meeting with Finance Minister Miftah Ismail.

Mr Bristow argued the legal protection for Barrick was not Reko Diq-specific only, but also a kind of security for future investment in the mining sector. He said the apex court’s review and parliament’s endorsement got delayed due to a change in government, but all stakeholders were working on that to move forward.

This is the first time that the demand for support from the major state institutions — parliament and the judiciary — has come to light for a commercial agreement on settlement of the arbitration award against Pakistan by World Bank’s International Centre for Settlement of Investment Disputes (ICSID).

Canadian firm’s chief, Miftah discuss investment in copper-gold project

The Supreme Court had in 2013 declared null and void the Reko Diq development lease, signed with Barrick Gold and Chilean firm Antofagasta during the Musharraf regime.

Mr Bristow said World Bank’s commercial arm — International Finance Corporation (IFC) — would be joining the upcoming joint venture with Barrick. He said the joint venture would be arranging about $4bn for the project development and about $2bn was expected to come from consortium partners, particularly the IFC and some other international export and import institutions of the leading economies for equipment, plants and expertise supplies.

He did not see any problem in implementation of the settlement and future development of the project, saying the agreement was signed in the previous regime and the new government was working for its implementation seamlessly, which meant all see its benefits for the people of Pakistan, particularly Balochistan. Likewise, the company has been working with the former and incumbent chief minister of Balochistan.

This was reinforced separately by Finance Minister Ismail after his meeting with Barrick’s chief. “We are looking forward to Barrick Gold’s investment in the copper and gold mine in Pakistan. Mark Bristow has a very enlightened vision for this mine, and I believe this investment is going to be transformational for Balochistan and Pakistan,” he said in a tweet.

The consortium of Barrick Gold and Antofagasta reached an agreement with the government in March this year for the settlement of ICSID’s award against Pakistan. Barrick decided to become a 50 per cent partner with the governments of Pakistan and Balochistan and state-owned entities in the Reko Diq gold and copper mining project in Balochistan, while the Chilean firm exited the contract in exchange for $900 million by Pakistani shareholders.

Now Barrick and Pakistan hold 50pc shareholding in the Reko Diq project. Of the 50pc Pakistan share, state-owned entities — OGDCL and Pakistan Petroleum Limited — jointly hold 25pc shares, while Balochistan has 15pc stakes in the special purpose vehicle to be funded by the federal government and 10pc on a free-carried basis.

Barrick will be the project operator that will get a mining lease, exploration licence, surface rights and a mineral agreement stabilising the fiscal and investment regime for a period of 40 years (extendable).

Mr Bristow said the company was working with the current government for the legal framework and desired legislation pertaining to the transaction. “We want a partnership framework that complies with the law,” he said, adding that total transparency was desired in the project’s execution.

Additionally, the company wanted a long-term stability with Pakistan. “We had been fighting for a long time and decided to find a way to execute the Reko Diq gold project because the conflict was bad for all parties,” he said, adding that it would attract additional investment in the region.

He said the consortium had an extensive history of working with the IFC, which managed private banks. They were negotiating with the IFC and export-import banks for a $4bn debt comprising 50pc of the total debt. And $2bn will be secured by the project’s consortium.

Mr Bristow said the project was expected to attract $10bn investment that included $4bn in the first phase, $3bn in the second phase and roughly $3bn at a later stage.

Responding to a question, he said the establishment of a copper and gold refinery in Pakistan to process the project’s raw materials was not feasible at this stage because it was viable above one million tonnes while production from Reko Diq would be around 200,000 tonnes in the first phase and 400,000 tonnes in the second phase.

About the security situation in Balochistan, he said Barrick had worked in conflict-ridden regions, including in Africa and elsewhere, and devised its own strategy for project execution.

The project is expected to come into production in 2027-28 and provide jobs to 7,500 people during construction and 4,000 during the operation phase.

Published in Dawn, July 19th, 2022